An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors.
Income tax benefit - Investments made in ELSS[Equity linked saving scheme] schemes are eligible for deduction from taxable income under Section 80C of the Income Tax Act. Offer tax deduction of up to 1.50 lakh under Section 80C of the Income Tax Act, 1961.
Lower lock-in period - In comparison to traditional investment avenues like PPF, NSC under section 80C of the Income tax Act, ELSS funds have the shortest lock in period of 3 years.
Tax-free dividends/Capital gains - Dividends declared under the ELSS scheme during the investment period are tax-free. The profits on the sale of ELSS units are treated as long-term capital gains, and are not subject to tax.
Higher return potential - ELSS funds invest a large part of the fund in equity, which despite short-term volatility has the potential to build wealth over the long term